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Who is subject to currency control. Any Russian currency resident, whether an individual or a Russian legal entity, that holds an account abroad or carries out foreign currency transactions with a non-resident. The concept of “currency resident” does not coincide with tax residence: it is tied to citizenship and residence permit, not to the number of days spent in the country.
The main duty is repatriation. An exporter must ensure that payment under a foreign trade contract is received in an account with an authorised bank within the period set by the contract. A counterparty’s delay is also the resident’s risk, not merely grounds for a claim against the counterparty.
The bank is not an observer but a control agent. An authorised bank must check every currency transaction for compliance with the law and may request supporting documents for the deal before carrying it out, not after.
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Duties under Federal Law 173-FZ
Notification of opening an account abroad. A resident must notify the tax authority of the opening or closing of an account with a foreign bank, or a change in its details, within one month of the event, whether an individual or a company.
Report on the movement of funds. Every year, by 1 June, a resident files a report on the movement of funds in a foreign account for the previous year, whether there were transactions or the account simply sat empty.
Repatriation of proceeds and advances. The duty applies not only to payment for exports but also to the return of advances if the non-resident’s counter-obligation has not been performed: the money must either return to an account in Russia or the delivery must close out the contract.
Restrictions on permitted transactions. Not every transaction on a foreign account can be carried out freely: the law and related Central Bank acts define a closed list of permitted credits and debits for residents’ accounts abroad.
What the bank checks on every payment
Registering the contract. The bank registers large foreign trade contracts and assigns them a unique number. Without it, the bank may refuse to process payments under the contract.
Match between the payment purpose and the documents. The wording in the payment order must correspond verbatim to the contract and invoice: a discrepancy, even a technical one, is grounds for a request for explanations and a delayed payment.
Deadlines for supporting documents. After receiving payment or shipping goods, a resident has a limited time to submit supporting documents for the deal to the bank, such as customs declarations, acceptance certificates and invoices.
Currency transaction code. Every transaction is coded under the Central Bank’s reference list; a wrong code is a formal ground for the bank to refuse to process the payment until it is corrected.
Fines under Article 15.25 of the Code of Administrative Offences
Breach of repatriation. The fine is calculated from the amount of funds not returned on time and grows with the length of the delay: the longer the money fails to reach an account in Russia, the higher the final penalty.
Failure to file or late filing of the account opening notification. A fixed fine for individuals and a multiple of it for officials and companies; a repeat breach within a year is classified separately and more severely.
Failure to file the report on the movement of funds. The penalty is imposed for the very fact that the report was not filed by 1 June, regardless of whether there was anything to show in it.
The limitation period for currency breaches is noticeably longer than the general administrative one. This is a case where a “forgotten” breach from five years ago can come to light in a check by the bank or the tax authority.
Currency control for structures in several jurisdictions
Currency control and CFC rules are separate duties. The account of a resident’s foreign company and the personal foreign account of the controlling person are reported separately: a CFC notification does not replace a report on the movement of funds on the account, and vice versa.
The country of the account does not relieve you of reporting to Russia. The fact that a jurisdiction does not exchange tax information with Russia automatically does not release the resident from the duty to declare the account: these are two independent, unrelated requirements.
Dual regulation. Structures with elements in Dubai, Switzerland, Turkey or Cyprus must comply both with the local bank’s rules and with Russian currency legislation at the same time, and the gap between them creates most of the practical difficulties for clients with an international asset perimeter.
Key figures
Experience in advising on currency transactions and disputes with banks, not a general summary of the law.
Common business mistakes
Confusing currency and tax residence. These are different statuses with different rules: a person can be a Russian tax non-resident and at the same time remain a currency resident with the full set of reporting duties.
Treating personal money as outside the control zone. The duties under Federal Law 173-FZ also cover individuals’ personal foreign accounts, not only corporate transactions, and this is a frequent cause of fines for business owners.
Not telling the bank in advance about a change of payment purpose. Changing the terms of a deal at the last moment without agreeing the wording with the bank almost always delays the payment for checking.
Postponing reporting “until an inspection”. The report on fund movements and the notifications are duties on a calendar, not a reaction to a request; voluntary late filing does not cancel the fine but usually reduces its amount.
Frequently asked questions
Who must report foreign accounts to the Russian tax authority?+
Russian currency residents, that is, Russian citizens and Russian legal entities that have opened accounts in banks outside the country, regardless of the amount and the activity on the account.
What are the consequences of failing to file a notification or report on time?+
An administrative fine under Article 15.25 of the Code of Administrative Offences; for systematic breaches, closer attention in later checks by the bank and the tax authority.
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